Drought Insurance Awash In Lawsuits

The big heat of `88 has frayed tempers in cities and rural counties alike with a withering drought and actions of an East Coast insurance company leaving thousands of Midwestern farmers steaming mad.

Acre upon acre of ravaged crops, stunted as if they were on Jonathan Swift`s fictional island of Lilliput, cover the fertile black loam of America`s heartland.

For more than 8,000 farmers in 10 states, including 1,026 in Illinois, anger is directed at the Chubb Corp., of Warren, N.J., which earlier this summer offered insurance policies to protect against drought, but backed out. Illinois farmers paid about $2 million in premiums, or about $2,000 each.

The farmers have gone to court, suggesting in more genteel legal terms that they`ve been handed a pile of manure. At stake is $400 million worth of insurance and perhaps the futures of farmers verging on financial ruin.

Carrying the banner for Illinois farmers in a class-action lawsuit before District Judge Ilana Rovner are lawyers from three Chicago area firms: Marvin Miller of Washlow Shertow & Miller, Michael Freed from Much Shellist Freed Denenberg Ament & Eiger and Daniel O`Connell of Joliet`s Hahn and O`Connell.

But they`ll be soon moving the case to Cincinnati, where District Judge Carl Rubin ordered the consolidation of all cases filed in Illinois, Kentucky, Minnesota, Iowa, Missouri, Wisconsin, Michigan, Indiana, Tennessee and Ohio, according to a Chubb spokesman.

The controversy`s roots stem to May 1, when Chubb, through a subsidiary, Federal Insurance Co., began marketing policies that offered crop protection against drought. The policies, sold through Good Weather International Inc., the master agent for Federal, were a slow sell.

The policies were structured to pay a percentage per acre depending on the amount of rainfall between June 1 and Aug. 31. Farmers could insure their crops for $100 or $200 an acre. For example, a farmer who insured 100 acres at $100 each would receive 82 percent, or $82 an acre, if rainfall was 30 percent of normal, Freed said.

As forecasters began predicting a drought, the policies sold quickly. In the two days before the June 15 deadline for policy applications, some 6,500 were filed. The company contends that it intended to sell only $30 million of the insurance, but agents sold more than $400 million, Miller said.

The company returned the applications to 8,761 farmers, who were understandably upset. As a good-will gesture, Chubb has sent payments equal to their policy premiums to 6,276 applicants at a cost of about $20 million.

Miller noted that acceptance of the payment is not a waiver of their claims in the lawsuit and argues that the company`s contention that it had capped total policies sold at $30 million is not necessarily a defense. ``If no representation was made to the farmer that there was a cap, then as far as the farmer was concerned, there was no $30 million cap,`` Miller said. ``And the agents didn`t know about any cap, either.``

In the meantime, the insurance departments of various states have jumped on Chubb. Last month, the Illinois Department of Insurance declared that Chubb would have to issue the policies or face hearings and penalties.

An irony to ponder: With the recent rains, it does not strain credulity that had Chubb issued the policies, the payouts would not have been that bad. AGE BIAS SUITS AT TALMAN Talman Home Federal Savings & Loan Association, whose television commercials exude an air of compassion for ``real`` Chicagoans, describes itself as an institution ``dedicated solely to people who work for a living.`` That credo doesn`t apply to its workers, according three former employees who have sued, alleging they were fired because of their age.

Attorneys Burton Weinstein and Susan Malone filed federal suits for Harry Veren, Robert Briehan and Ernest Tularico, former managers of branch offices who were fired on the same day last November.

Tularico, 63, had been a Talman employee for nearly 35 years and was in his office at 1 N. Wacker Dr. when notified ``to leave immediately, pack your bag and get out without so much as a goodbye,`` Weinstein said. Supposedly identical scenes played out at the Skokie branch, where Veren, 60, a Talman employee for 12 years, was manager, and at a branch at 4901 W. Irving Park Rd., where Briehan, 62, a 19-year Talman employee, ran the show.

The suits, assigned to District Judges Ilana Rovner, Charles Norgle and Paul Plunkett, charge that the dismissals violated the federal Age

Discrimination in Employment Act and seek reinstatement with back pay plus damages. ``They had satisfactory job ratings, and they were all replaced with younger people,`` Weinstein said, adding: ``It was totally humiliating.``